Bakersfield, CA rental market

4 Replies

Hi Everyone, 

Does anyone have any recent experience with the real estate market in Bakersfield, CA.
I was reading a Bakersfield BP discussion thread from 3 years ago. Someone warned about overinflated prices and higher vacancy being an issue with layoffs related to the oil market.

I live in California and it's impossible to find cash flow positive properties via MLS. Bakersfield's numbers at least work out if the down payment is high enough (25-30%).

I'd love to hear everyone's opinions and experience with pricing and the rental market in Bakersfield.

Thanks

Whoever said in 2017 that home prices were overinflated was not correct in hindsight.  The Bakersfield housing market handled the job losses of the oil markets very well (note that there was also a major drought at a time which was horrible for the ag industry). Prices and rents have both gone up since 2017. 

That said, with houses being more expensive today compared to 2017, and the fact that used home prices are very close to new homes in terms of price per foot, there are some headwinds.  New construction will likely ramp up, adding supply and likely limiting major future price appreciation.

It is still possible to buy cash flowing properties, but the low fruit is long gone and it takes more effort to engineer a solid deal. 

@Bao Do thanks for asking your question!  I would like to refer you to my previous posts on the Bakersfield area for some more detailed information, but for now, IMO, Bakersfield is a great place for growth and cash flow.  If you look back to around mid-2011 you will see that our prices previously bottomed out around that point due to the heavy reliance on agriculture (hit by drought) and oil (hit by economy).  Since then our prices have been steadily climbing and particularly within the past few years we have really seen an uptick in our pricing and values.  

What has happened in Bakersfield is that since the recession, we have learned that we cannot rely on the oil and agriculture sectors alone, like we had in the past, and we started to diversify into other industries.  Specifically the newly burgeoning distribution and transportation business.  The reason for this is the price of the land and the proximity to the entire CA population.  As we started to diversify into that industry, we also saw an uptick in medical due to the aging population, and very recently we are starting to see more entrepreneurs come to the community because of the cost of living but still close proximity to the major markets in the State. 

I would be happy to discuss a little further.  Feel free to PM me.  Hope this helps. 

@Bao Do I see most CA based investors looking out of state at this point in the market cycle. That said it's of course not everyone! However I'd say most investors I talk to that are cash flow focused, are looking elsewhere. 

@Bao Do

People have been saying for YEARS that prices are inflated & we’re heading for a recesssion or at least a market downturn. Theyve said it 3 years ago & they’ll say it 3 days from now too lol.

While yes, it’s always possible that the economy could experience some unexpected harmful event &  a recession or market correction could come, if you look at real estate now in kern county the fundamentals & market conditions are much more stable & different than pre- 2007/2008 crash conditions. 

For example, prices and home values have been appreciating at a steady rate comparable to the rest of the nation year over year (roughly 2-6% per year), there are much more regulations & restrictions on lending & appraisal practices that had previously led to the crash, and also the economy in general is pretty healthy & is providing a good foundation for a stable real estate market. 

Bakersfield & kern county is one of the few places left in ca where you can get good cash flow, good appreciation & a low price for entry. Good luck in your real estate ventures!